Chipping away at AT&T v.Concepcion

In Feeney v. Dell, we spotted a ray of hope piercing the clouds of the Supreme Court’s holding in AT&T Mobility LLC v. Concepcion.

In Concepcion, the Supreme Court struck a significant blow against the rights of consumers by allowing a corporation to waive class action liability by merely inserting an arbitration clause with a class action waiver into any consumer contract. We have written extensively on this topic, the damage it does to your rights, and how it harms individual protections against widespread abuse.

In Feeney v. Dell, the Massachusetts Superior Court determined that Concepcion did not govern and ruled that the class action waiver was unenforceable because it would not have been feasible for the consumer to pursue his claim on an individual basis.

Now, in Feeney v. Dell, it appears that the Massachusetts Superior Court has found a chink in Concepcion‘s armor by:

1.) Limiting Concepcion‘s holding to cases in which an arbitration provision is so “consumer-friendly” that individual arbitration would give plaintiffs better results than if they sued as a class.

2.) Finding that arbitration clauses that serve only to waive class action liability are unconscionable in situations where a class action is necessary for a consumer to receive a fair and just disposition of their claims.

In Feeney, Dell had collected sales tax on computer service contracts in contravention of Massachusetts law, charging named plaintiffs Mr. Feeney and Dedham Health $13.65 and $215.55, respectively. These claims would be far too small to pursue individually. The arbitration provision in Dell’s contracts barred class actions.

In Concepcion, the Supreme Court found, among other things, that AT&T’s arbitration provision was very consumer-friendly, with clauses designed to keep the process simple and cover a plaintiff’s expenses.

On the other hand, Dell’s arbitration provision forced any and all claims to be arbitrated individually but provided no benefit to consumers for doing so. Because it served solely as a prohibition upon class actions and was not consumer-friendly, the Superior Court found that the Dell provision did not provide a “meaningful arbitration process” and was “infeasible as a matter of fact.” Thus, finding Dell’s provision to be unconscionable did not conflict with Concepcion, since any interest the Supreme Court might have had in promoting arbitration as an alternative to class action required that there be a “meaningful arbitration process in the first place.”

Additionally, the Superior Court noted that Concepcion focused solely on the issue of whether states should be able to allow class actions “when [class actions] are not necessary to ensure that the parties . . . are able to vindicate their claims.” In contrast, in Feeney, class procedures were necessary to vindicate the plaintiffs’ claims. Forcing them to litigate or arbitrate individually would be cost-prohibitive and effectively “kill” the lawsuit. This doctrinal distinction allowed the court to find Dell’s provision unconscionable while not contradicting Concepcion.

This narrow reading of Concepcion is very good for consumer’s rights, as Feeney allows consumer class actions to work as they were intended: to protect individuals who have been wronged against widespread corporate abuse or wrongdoing. Hopefully, this will become part of a trend!

This decision is already in the process of being appealed, so we will keep you posted as to any future developments.

Joshua Druckerman is a second year law student at New York Law School. He is a member of Law Review.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.